Fire and rehire changes under the Employment Rights Act 2025
Fire and rehire continues to exist as a last-resort mechanism, but the Government has been clear for some time that its use should be constrained, with this consultation shaping how those constraints will operate in practice.
When fully implemented, the Employment Rights Act 2025 will significantly restrict the use of dismissal and re-engagement to impose contractual change. The Act is now on the statute book, but the fire and rehire provisions are not yet fully defined or in force. Key elements, including the scope of protected terms, are still being developed through consultation and secondary legislation.
Once in force, the regime will make it automatic unfair dismissal where an employee is dismissed or replaced in order to force changes to certain protected contractual terms, described in the legislation as restricted variations. The aim is to introduce stronger protection for workers and tighter limits on employer leverage.
Automatic unfair dismissal removes the usual balancing exercise. Business rationale, reasonableness and even a well-run consultation process will not cure the dismissal if the change falls within a restricted category. That is why the definition of restricted variations matters so much for employers.
This consultation forms part of that process, affording employers a chance to influence the scope of the rules.
Fire and rehire consultation opens
The Government is consulting on whether two further areas should be brought within the protected category:
a. Employment expenses and benefits: This includes contractual entitlements that may sit outside salary, such as allowances, reimbursed expenses and benefits which are contractually guaranteed rather than discretionary.
b. Shift patterns: This covers changes to working patterns, including shift structures, rotas and scheduling arrangements, particularly where these form part of the contractual framework rather than a flexible policy.
The consultation is to support the Government in deciding how far the new restrictions will extend, particularly in relation to expenses, benefits and shift patterns, areas where many employers currently rely on contractual flexibility.
The consultation closes at 11:59pm on 1 April 2026. Any resulting changes will require Parliamentary approval before taking effect.
DMS Perspective
Fire and rehire has always sat at the riskier end of employment practice, and this consultation reflects the Government’s long-running policy direction to narrow the circumstances in which it can be used.
This consultation is really about how far the Government is prepared to go in closing off dismissal and re-engagement as a change management tool. Employers that have historically embedded flexibility into policies rather than contracts are in a stronger position. Where benefits and shift patterns are hard-wired into contracts, future change becomes materially harder under the new regime.
Employers that rely on dismissal and re-engagement as a last-resort pressure point should assume that option is narrowing fast. Once automatic unfair dismissal applies, leverage disappears entirely.
Importantly, the Act does not outlaw contractual change, though it does raise the stakes where consent is not secured. That means earlier engagement, clearer justification and stronger commercial groundwork will matter more than ever.
